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    • letsbetfair
    • By letsbetfair 14th May 19, 12:58 PM
    • 717Posts
    • 157Thanks
    Keep s&s ISA or overpay mortgage?
    • #1
    • 14th May 19, 12:58 PM
    Keep s&s ISA or overpay mortgage? 14th May 19 at 12:58 PM
    I've got a 1200 evestor ISA (opened to get a 100 bonus - now paid). I've not used any of my ISA allowance this year.

    I have about 17k on a tracker mortgage, charging 1.79%. I'm trying to decide whether to just close this Evestor ISA to overpay the mortgage or to keep as a stocks and shares ISA (but invested with another company). Any help deciding would be welcome! I'm not going to be retiring for 20+ years, and can overpay my mortgage with no charges; I'm paying into a final salary pension at work.

    I'm currently paying 500/month into regular savings accounts which I'll use to overpay the mortgage - so I should have it cleared in a few years anyway. I'm just trying to decide whether to prioritize paying this mortgage off or look to keep a small investment ISA too... Thanks for any ideas (and I know this is a nice problem I'm lucky to have!)
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    • Alexland
    • By Alexland 21st May 19, 9:53 AM
    • 5,113 Posts
    • 4,437 Thanks
    • #2
    • 21st May 19, 9:53 AM
    • #2
    • 21st May 19, 9:53 AM
    Without knowing your precise age, income, job security, property value or asset allocation it's hard to comment.

    My view is that running investments alongside a small mortgage for 20+ years is fine provided it is easily affordable, not incurring product fees, etc and you are confident in your ability to earn ongoing to pay the repayments even if interest rates increase.

    With a suitably adventurous asset allocation (and perhaps keeping costs lower than Evestor such as Vanguard Investor) then over the period of 20 years I would expect the investments to generate a greater return (with ups and downs along the journey) than the mortgage interest.

    If under 40 there would be an additional 25% benefit putting the money into a S&S Lifetime ISA for age 60. Depends when you plan to withdraw the money. Like you I already have pension arrangements (ample DC pots) so at 60 my LISA will be recycled into my wife's pension (smaller DC pots) and gifted to our children for house deposits. I am in no hurry to pay back the last 20% of our mortgage.

    Also even if you have a DB pension it might be worth increasing your pension contributions (you probably have several options) if you are paying any higher rate tax.

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